Consumer sentiment fell in May

Consumer sentiment fell at a slower pace in May than in recent months, as uncertainty over trade policy continues to cloud outlooks, according to the University of Michigan Surveys of Consumers..The index tracking consumer sentiment fell nearly 3 percent to 50.8 from 52.2 in April, a relatively small drop following four straight months of more significant declines. The index measuring current economic conditions fell 3.7 percent to 57.6 from 59.8 in April, while the index of consumer expectations dropped 1.7 percent to 46.5 from 47.3 in April. All three indexes were significantly under their year-ago readings, with consumer sentiment down 26.5 percent; current economic conditions falling 17.2 percent; and consumer expectations dropping 32.4 percent. Assessments of personal finances fell nearly 10 percent amid weakening incomes, according to the survey. Year-ahead inflation expectations increased to 7.3 percent this month from 6.5 percent in April, with Democrats and Republicans both expecting inflation to rise. Long-term inflation expectations increased to 4.6 percent from 4.4 percent in April amid an especially large jump among Republicans, according to the report. Interviews were taken between April 22 and May 13, two days after President Donald Trump announced a pause on certain tariffs from products made in China. “Many survey measures showed some signs of improvement following the temporary reduction of China tariffs, but these initial upticks were too small to alter the overall picture — consumers continue to express somber views about the economy,” said Surveys of Consumers Director Joanne Hsu. The Conference Board Consumer Confidence Index fell for the fifth straight month in April nearly 8 points last month to 86.0. The index based on consumers’ assessments of current business and labor market conditions fell nearly a full point to 133.5. The index tracking consumers’ short-term outlook for income, business and labor market conditions fell 12.5 points to 54.4, its lowest mark in 13 1/2 years and significantly under the mark of 80, which usually signals an upcoming recession. “The decline was largely driven by consumers’ expectations,” said Stephanie Guichard, senior economist, global indicators at The Conference Board. “The three expectation components all deteriorated sharply, reflecting pervasive pessimism about the future.”